Fintech is slowly taking over the world, with 46% of consumers using digital banking channels exclusively. In 2020, the global fintech market was valued at $110.57 billion — a figure that is expected to grow to $698.48 billion by 2030.
Of all the things contributing to this bright future for fintech, data analytics is one of the most important. It’s what allows fintech companies to make quick, accurate decisions in order to better serve their customers.
In traditional financial institutions, data is often siloed in different departments and is not always accessible or used effectively. Fintech companies have made great strides in using data analytics to their advantage while advancing their business models forward. These technologies are giving fintechs the computing power to deliver better holistic services from both an internal and external perspective.
The Future of FinTech Relies on the Improved Use of Analytics
In recent years, fintechs have experienced a boom, unlike any other industry. Due to accelerations in the field, there has been an influx of major investments. According to CBI Insights, there are 1,021 unicorn companies (a private company valued at over $1 billion) in the world with a cumulative valuation of $3.3 trillion.
Fintech isn’t just exciting for industry players; everyday consumers are benefiting, too. Financial services and other business-related concerns are allowing consumers to access solutions in real-time. Like any other rapidly growing industry, fintech continues to redefine itself with game-changing innovations cropping up several times a year.
As a result, the competition in the field has increased, pushing existing key players to take up innovations that they weren’t previously considering. PWC reports that 77% of financial institutions are expected to increase their focus on innovation in the interest of consumer retention.
Keeping this in mind, one can wonder: what does the future of fintech look like? How will some companies leverage the use of analytics to remain competitive in the growing market?
Data analytics, in fintech, lays the foundation for a company’s understanding of its customers. The analytics give insights into customer behavior, needs, and expectations. The better a fintech business (or any business) understands its customers, the better it can serve them with custom and relevant solutions. Analytics is the crutch to modern business, and therefore, the key to improved customer service and growth.
Data analytics can also help fintech companies offer products and services that appeal to a larger audience. Banks and other financial institutions have access to large customer data sets, but they often fail to leverage the power of these insights efficiently in the era of big data.
Fintech companies have unearthed what the sector of analytics can successfully achieve when business operations harness its deep learning capabilities. With this digital software at play, understanding their customers and making quick decisions that benefit them, give this emerging industry a competitive edge over traditional financial institutions.
The Possible Future of Fintech
Due to the heightened interest in the fintech market, there are many predictions floating around about the industry’s possible future.
For instance, McKinsey forecasts that blockchain, IoT, and hyper-automation will become integral components of the fintech world in the coming years. Some emerging technologies becoming instrumental in the fintech space include:
- Blockchain: With the increasing popularity of Bitcoin and other cryptocurrencies, blockchain has become a topic of immense interest. Various companies are exploring distributed ledger technology for its potential in the fintech world.
- IoT: The internet of things is growing at a rapid pace, with more and more devices getting connected to the internet every day. In fintech lending, this could mean a reliance on IoT to determine risk and increase customer engagement.
- Hyper-automation: Hyper-automation involves the use of artificial intelligence and machine learning to automate business processes. In fintech, this could lead to increased efficiency and better customer service.
Why Analytics is the Future of Fintech
In 2022, the global big data industry is valued at $274.3 billion, and this valuation is expected to increase exponentially in the future due to the generation of nearly 2.5 quintillion bytes of data by global internet users every single day.
Data gives organizations the power to make informed decisions and boost revenue generation. By efficiently tracking, collecting, and analyzing actionable, data-driven insights, companies are able to remain competitive, deliver better products and services, improve customer satisfaction, and drive innovation. Analytics allow key players in the fintech industry to:
- Make Informed Decisions: Fintech companies can use data to understand consumer behavior and act on it accordingly. In this way, fintech corporations can make better-informed decisions about what products and services to offer and how to market them to customers.
- Generate Revenue: Fintech companies can use big data to identify new opportunities for revenue generation. They can also track customer spending patterns and understand what products or services are most appealing to them. The information can then be used to increase sales and boost profits.
- Improve Operational Efficiency: The inherent mechanism of most workplace operations can be improved by taking appropriate action on the data collected from internal and external sources. Fintech companies can use data analytics to identify areas of inefficiency and augment their operations accordingly.
- Improve Marketing: Analytics can help businesses understand which marketing efforts are working and which ones need to be changed or dropped altogether. Fintech companies can use data to identify customer segments, understand their needs, and craft targeted marketing campaigns across multiple channels.
- Identify Trends/Frauds: Trend detection depends largely on data analytics, and fintech companies can leverage it to make sure they’re one step ahead of the competition. Likewise, fintech lending can benefit from analytics’ fraud and risk detection capabilities.
- Reduce Business Threats and Financial Waste: Financial waste occurs when companies make uninformed decisions. Companies that lack information often lag behind their competitors. Meanwhile, data-backed decisions can help mitigate business threats and reduce resource waste in the fintech world.
With every passing day, our world’s reliance on data is increasing. Businesses in the fintech industry need to know how to collect, track, organize, scale, and use analytics to ensure success and growth.
The Right Analytical Tools for Fintechs
As mentioned earlier, artificial intelligence is bound to be an important part of the fintech space now and into the future. GDS Link offers a combination of artificial intelligence and data analytics services to make fintech lending and other banking industry services easier.
Assisting fintech companies in decisions, lead generation, marketing, and fraud risk management, GDS Link is a one-stop shop for your smart lending needs. Schedule a Complimentary Consultation today to find out more.